The Spanish brand of outdoor apparel is about to enter the Chinese market through a very specific business approach: Grifone has partnered with Shanghai Yihaoying E-Commerce, which specializes in online retailing on behalf of outdoor brands. Yihaoying already runs exclusive or authorized internet shops for The North Face, Osprey, Mobi Garden and Acome, as well as two important domestic brands and for Arc'teryx, the leading premium outdoor brand in the market. Jack Wolfskin has also become a partner recently.
While Yihaoying retails an impressive range of big brands, its chairman, Steven Cai, emphasized that the internet can also be an appropriate tool to penetrate the Chinese market for smaller international brands arriving relatively late as is the case with Grifone. Cai recommends this strategy to avoid massive expenses for costly sales offices and/or corporate brick-and-mortar retail spots.
Most outdoor brands don't run their own web shops in China, partly because they are not sure of getting paid by customers. Hi-Tec Sports, for example, uses a Chinese online store that requires customers to pay cash when they receive the goods at their homes. Foreign brands prefer to be hosted on an e-commerce portal like Cai's website or T-Mall, or they leave it up to their exclusive distribution partner to handle this retail channel. Only a few major local brands have decided to run their own online outlets, among them Kailas, Camel (unrelated to the U.S. tobacco brand), KingCamp and Toread.
Yihaoying expects to generate sales with outdoor brands of around 40 million yuan renmimbi (€4.91m-$6.53m) this year. The target for 2014 is RMB100 million (€12.3m-$16.3m). Most of its business is done in Mainland China, with a smaller portion of deliveries going to Macau, Hong Kong and Taiwan. Cai believes that the Chinese online market is facing a major clean-up, leading to the disappearance of quite a few small web shops. His guess is that there are currently 3,000 websites in place that trade to some extent professionally in the outdoor market. On the other hand, there are only about 100 sites that are truly professional in terms of deliveries, service, brand positioning and all the other requirements of a state-of-the-art online outlet.
According to Cai, online retailing has many advantages as compared to traditional shops located on the streets or in shopping malls: The logistics are extremely good, allowing deliveries to almost all places in the country within 24 hours (or 48 at the most). This comes with very low shipment costs by western standards: At Yihaoying, the average purchasing price per delivery is around RMB400 (€49-$65), while the average cost per shipment is just RMB13 (€1.60-$2.10).
In spite of the promising outlook that Chinese online retailing can offer, Yihaoying is looking into physical retailing as well as part of a new multi-channel strategy. For 2015, the company is planning on launching a multi-brand store combined with its warehouse on a gross surface of 20,000 square meters. The store is expected to open in 2015 near Shanghai's Disneyland Park.